On Wednesday, TD Cowen adjusted its outlook on Raymond James (NYSE: RJF), increasing the price target to $150.00 from the previous $128.00 while maintaining a Hold rating on the stock. The adjustment follows a notable rise in the company's shares after a significant rate cut by the Federal Open Market Committee (FOMC).
The firm's analyst initiated Fiscal Year 2026 (September) earnings per share (EPS) projections at $11.13, which aligns with the consensus and serves as the basis for the new 12-month Sum of the Parts (SOTP) price target. Additionally, the analyst raised the Fiscal Year 2025 EPS estimate to $10.65, up from the former $10.26.
The updated price target reflects an assumption that Raymond James can return to a 14 times target price-to-earnings (P/E) ratio, which is comparable to the cycle in 2021. The analyst's commentary suggests that the recent stock price increase of approximately 25% post-FOMC's 50 basis points rate reduction has already accounted for much of the anticipated upcycle in capital markets.
The revised target is based on the belief that Raymond James will be able to achieve the earnings and P/E ratio projected, despite the recent surge in its stock price. The analyst's hold rating indicates a view that while the stock may not offer substantial upside potential at its current level, it also does not present a significant downside risk.
In other recent news, Raymond James Financial (NYSE:RJF) reported record fourth-quarter revenues of $3.46 billion, accompanied by a net income of $601 million. This significant growth was driven by a rise in advisory revenue, which reached $205 million, and a robust investment banking performance. BofA Securities and Citi have subsequently increased their price targets for Raymond James to $152 and $145, respectively, following the company's earnings per share (EPS) beat.
Raymond James also reported a substantial increase in total client assets, which reached a record $1.57 trillion, and saw net new assets of $60.7 billion domestically for the year. The company's share repurchase activity remained strong, with 2.6 million shares repurchased for $300 million in the quarter.
In recent developments, Raymond James anticipates an additional $5 billion in outflows in the first quarter due to the offboarding of an Office of Supervisory Jurisdiction (OSJ). However, BofA expects net new assets to normalize, projecting a 5-7% growth rate for the following year. Looking ahead, Raymond James maintains an optimistic outlook for fiscal 2025, expecting growth driven by increases in assets and fee-based accounts.
InvestingPro Insights
Raymond James' recent performance aligns with TD Cowen's optimistic outlook. According to InvestingPro data, the company's stock is trading near its 52-week high, with a impressive 58.4% price total return over the past year. This strong performance is supported by solid fundamentals, including a revenue growth of 11% in the last twelve months and an attractive PEG ratio of 0.68, suggesting the stock may still be undervalued relative to its growth prospects.
InvestingPro Tips highlight that 12 analysts have revised their earnings upwards for the upcoming period, reinforcing TD Cowen's positive EPS projections. Additionally, Raymond James has maintained dividend payments for 40 consecutive years, demonstrating financial stability and commitment to shareholder returns.
For investors seeking a deeper analysis, InvestingPro offers 13 additional tips for Raymond James, providing a comprehensive view of the company's financial health and market position.
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